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Pennsylvania firm to build $1B natural gas pipeline in N.J., Pa.

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Proposed route of the PennEast Pipeline.
Proposed route of the PennEast Pipeline. - (Penneastpipeline.com)

PennEast Pipeline Co. LLC of Wyomissing, Pennsylvania, plans to build a 100-mile pipeline that aims to bring lower cost natural gas produced in the Marcellus Shale region to homes and businesses in Pennsylvania and New Jersey.

The PennEast Pipeline is designed to provide natural gas service to 4.7 million homes, up to 1 billion cubic feet per day, which would offer consumer savings in lower energy and gas transportation costs, according to a news release. PennEast was formed by the partnership of AGL Resources, NJR Pipeline Co., South Jersey Industries and UGI Energy Services, which combined are investing nearly $1 billion to build the pipeline.

The pipeline would begin in Luzerne County in northeastern Pennsylvania and end at Transco’s Trenton-Woodbury interconnection in New Jersey. In Pennsylvania, the preliminary route would run from Luzerne through Carbon County, Northampton County and Bucks County.

UGI Energy Services is the project manager for the development of the project and will operate the pipeline, according to the release.

“Natural gas is based in Pennsylvania, but there’s an opportunity to provide the rest of the country and make more markets available,” Patricia Kornick, project spokeswoman, told Lehigh Valley Business this morning. “With Pennsylvania by far the fastest growing natural gas market, we recognized an opportunity.”

As an example of cost reductions, natural gas prices in New Jersey exceeded $100 per dekatherm this past winter, Kornick said. Meanwhile, natural gas in the area that PennEast will access traded in the range of $3 to $4 per dekatherm. The proposed pipeline will help reduce this price volatility to the benefit of New Jersey’s nearly 3 million natural gas consumers.

PennEast will begin preliminary engineering studies in the next few months, along with a formal application before the Federal Energy Regulatory Commission. If all local, state and federal approvals are approved, construction of the pipeline could begin in 2017, she said.

If approved, it would be in service in late 2018.

The route depends on acquiring all approvals, responses from stakeholders and what PennEast is able to gauge from environmental studies that factor into the route, Kornick said.

“We will do open houses throughout the project,” she said. “We want to give them [consumers and business owners] an opportunity to participate in the process.”

During the seven-month construction phase, the PennEast project is estimated to create in excess of 2,000 jobs, as well as many other ancillary jobs.

According to the news release, prior to the development of the Marcellus Shale industry, natural gas lines were built to bring gas primarily from the Gulf of Mexico region and Canada into the Northeast.

Pennsylvania is the fastest growing natural gas producing state in the country, according to the U.S. Energy Information Administration, and the PennEast sponsor companies recognized the opportunity to use locally produced gas to serve growing markets in the mid-Atlantic.

Brian Pedersen is a business reporter for Lehigh Valley Business, a sister publication of NJBIZ.

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